AMBA’s TTM adj EPS is $1.56 per share giving it a P/E of 37. I sold more than half of my shares and still hold a 2.8% position. The last yoy adjusted EPS growth rate is about 84%. Here are the last several quarters of EPS growth (most recent on the bottom:
4/30/2013 90.9%
7/31/2013 13.0%
10/31/2013 19.4%
1/31/2014 44.4%
4/30/2014 19.0%
7/31/2014 42.3%
10/31/2014 83.8%
So EPS growth has been up and down without a clear pattern.
I’m debating whether to sell more of my shares given the high P/E relative to SWKS. Here are the past few quarters of SWKS EPS growth:
12/31/2012 61.8%
3/31/2013 50.0%
6/30/2013 20.0%
9/30/2013 20.8%
12/31/2013 21.8%
3/31/2014 29.2%
6/30/2014 53.7%
9/30/2014 75.0%
12/31/2014 88.1%
So SWKS’s EPS growth is better and its P/E is 21.4 versus AMBA’s 37.
Neil mentioned that AMBA is his top pick for new money. How does that fit in with the above?
Chris
11 Likes
Chris,
SWKS is less risky than AMBA. AMBA is still by and large a GoPro related story. SWKS is highly diversified. I have already cut my position by 2/3rd, considering valuation, so I am inclined to let the remainder run.
Anirban.
SWKS is less risky than AMBA. AMBA is still by and large a GoPro related story. SWKS is highly diversified. I have already cut my position by 2/3rd, considering valuation, so I am inclined to let the remainder run.
Hmmm. Less risky, faster growing, and lower P/E. Seems that SWKS is lower probability to decline and higher probability to increase in stock price. If SWKS had the same P/E as AMBA its stock price would be $141, not $82!!!
Chris
2 Likes
Hi Chris, I also sold out of AMBA on evaluation, and placed my money elsewhere, while keeping all my huge position in SWKS. However, selling something like TCS, I kind of know I’m 100% right. Selling AMBA, who knows? I just felt more comfortable spreading that money around. Not the same conviction.
Saul
I was hoping to hear from Neil
I was hoping to hear from Neil to hear his view in light of the valuation. Neil, are you seeing something with AMBA that I am not. Why is it your top pick for new money? Thanks.
Chris
While I agree that AMBA is a GoPro story, on the books they are a security camera story. I am holding at a less that 2% position (no risk to port returns, obviously) and am up 94%. I would be willing to add on a heavy pull-back. Google/DropCam being a primary reason and recent innovations the second, neither of which have played out.
http://news.investors.com/111414-726598-chipmaker-ambarella-… Nov 14, 2014
Wang says its latest chips enable a new generation of dashboard cameras that capture high-quality images even at night, and with Wi-Fi.
Ambarella’s technology has a “surround view” capability that lets it stitch together video from cameras on both sides of a car, resulting in a high-definition “aerial” view, Cassidy says.
About 45% of Ambarella’s business is now in IP security cameras, he says, making that market “a bigger growth engine than GoPro.”
“We are estimating 40% year-over-year growth for Ambarella’s IP security revenue,” Cassidy said.
http://www.techinvestornews.com/Semis/Latest-Semiconductor-N…
Matt Ramsay, Canaccord Genuity: “Further, we believe Ambarella’s investments in video analytics will prove significantly undervalued and provide sustained long-term differentiation and pricing stability. We believe Ambarella’s lineup of application-specific video encoding processors are differentiated in terms of both video compression and processing power efficiency. We believe leadership in both of these vectors is sustainable and will allow Ambarella to maintain its leading market share position in high-definition video encoding processors across a variety of growing end markets as the SD-to-HD-to-UltraHD transition accelerates. Long term, we believe Ambarella’s investments in video analytics software and encoding expertise will drive significant value and differentiation as pre-pended video compression analytics hints and camera-side analytics become increasingly important for real-time and cloud-based video analysis. Important applications include facial and action recognition, security, augmented reality, self-driving autos, and content-aware advertising. In fact, we believe the realized value of both client- and server-side video analytics is at the tip of the iceberg, and Ambarella’s investments in this area will eventually prove its most valuable."
This one does need to be watched very closely, including following competitors. I totally understanding selling to create liquidity, balance your portfolio, etc. - everyone has different needs and goals.
cautiousone
4 Likes